Efficient inventory management is key to the success of any business. Your inventories hold the bulk of your working capital, better you manage it, better the business results. Just like Cash flow, it can make or break your business.
Any inefficiency in inventory management will impact the business in incurring the high cost involved managing inventories and can lead to lost sale as well.
In this article, we are sharing 5 tips to manage inventory efficiently.
Keep an eye on fast-moving and slow-moving inventories
Knowing fast- and slow-moving products will help you to optimize the working capital of the business. Slow-moving goods will block the working capital. Periodical movement analysis of inventory will provide you with insights about the flow of the stock in the businesses. It is very crucial for business decisions such as products to invest more, discontinue the products which are slow in movement etc.
Maintain optimum stock levels
Managing the right stock in the right quantities at the right time and place is key for efficient inventory management. Overstocking will lead to cash flow blockage and the additional cost for managing excess stock. On the other hand, understocking leads to loss of sale due to non-availability of stock at the right time.
Automating the stock level by considering the historical pattern of consumption or with defined formula will help you to maintain the optimum stock levels.
Keep Track of Ageing of Stock
Keeping track of ageing of stock will help you to identify the stocks which are older and those which are about to expire. This is very important as the older stock may depreciate or become obsolete and result in a loss. Periodical tracking will help to sell those stock before it becomes too late
Know the stock which yields high and low-profit margin
The stock Item may yield low profit, but the outward movement is high. On the other hand, the profit margin will be high, but the product movement is slow. Knowing the profitability of product will help you to take better inventory related decisions.
Automate Inventory Management
Using software will help you automate the inventory management process and all the inventory reports will be available automatically which is crucial for forecasting stock movements and optimizing inventory level. It provides you with much-needed insights on the stock trends and gaps. Using accounting software will help in providing on-time accurate and actionable information which are crucial for decision making.